America's Economic Indicators Are on the Rise

There are signs that the American Great Recession of 2007-2009 is actually ending. Home foreclosures and layoffs have dropped to pre-2007 levels. Economic output has rebounded. The Dow Jones industrial average is at record highs. But with unemployment at 7.7% and with 3 million fewer jobs than when the recession began, the US has a way to go. The housing market is improving, but it is not strong enough to feed economic growth, and job creation still has far to go before it can be called robust. After five years, the US is nearly back to where it was when the recession began. But the 2013 trends are healthier and fears that the economy could fall into another recession have disappeared. ~~~~~ WHAT'S STRONGER : (1). HOUSEHOLD WEALTH. Collapsed home values and stock prices have now been reversed. Household "net worth" (the value of homes, investments, bank accounts and other assets, minus debts such as mortgages, student loans and credit card balances) reached $66.1 trillion in the 4th quarter 2012, according to the Federal Reserve. That was only 2% below the peak reached in the fall of 2007. Steady increases in stock prices and home values so far this year have helped Americans, on average, to regain all their lost wealth, though many individual families have yet to recover. Increased net worth is vital to the economy because it drives spending. (2). RETAIL SALES. Just as household wealth has recovered, so has consumer willingness to spend more to shop, eat out and take vacations. That trend has spurred retail and restaurant job growth. Retail sales totaled $421.4 billion in February. Adjusted for inflation, that was nearly 18% above the recession low and just 0.7% below the record level in November 2007. (3). LAYOFFS. The job market remains weak. But if you have a job, you're less likely to lose it than at any other point in at least 12 years. That's a sharp turnaround from the depths of the recession, when layoffs soared - from 1.8 million in December 2007 to 2.6 million in January 2009. In January this year, employers cut 1.5 million jobs - the lowest monthly total in the 12 years the government has tracked such data. That explains why the number of people seeking first-time unemployment benefits each week has fallen - from 667,000 one week in March 2009, the most in nearly 25 years. Over the past month, weekly applications have averaged 354,000, only slightly more than in December 2007. (4). FORECLOSURES. One of the most visible signs of the recession was the "Foreclosure" and "Bank Owned" signs that sprang up around the country. But home prices have been rising steadily. Foreclosures have sunk back to pre-recession levels. Banks repossessed 45,000 homes in February 2013, according to RealtyTrac, a foreclosure listing firm. That was the fewest since September 2007 and was down from a peak of 102,000 in March 2010. (5). STOCK MARKETS. The markets have finally recovered the huge losses investors suffered during the recession. The Dow Jones industrial average closed at an all-time high of 14,253.77 on March 6. That topped its previous peak of 14,164.53 in October 2007. The Dow had plunged all the way to 6,547.05 in March 2009. It closed even higher last Tuesday at 14,662. 01. And the S&P 500 stock index, a broader measure of the market, reached a record 1,570.25. (6). GDP. America's economy is producing more goods and services than before the recession began. In the final three months of 2007, it produced an annual rate of $13.3 trillion in goods and services, a record high. That figure had shrunk to $12.7 trillion when the recession ended. It is recovering. The US gross domestic product, the broadest gauge of production, regained its previous peak by the end of 2011. And in the final three months of 2012, GDP was $13.7 trillion. Still, that gain comes with questions, because the population has grown. Viewed on a per capita basis, GDP at the end of 2012 remained 1.5 percent below its pre-recession level. (7). The recession eliminated 8.7 million jobs. Since then, 5.7 million jobs have come back, leaving the economy 3 million short. And the American population aged 16 and older has grown by 13 million since then. As a result, fewer people are either working or looking for work than before the recession. The labor force participation rate - the percentage of adults with a job or seeking one - has sunk from its pre-recession level of 66% to 63.5% in February. That decline in the labor pool matches a 30-year low and is worrisome. ~~~~~ WHAT'S NOT BACK : (1). UNEMPLOYMENT RATE. When the recession began, unemployment was 5%. Now, it's 7.7%. Probably no figure better illustrates the downturn's real damage. The unemployment rate is well below the recession's peak of 10% in October 2009 but far above the 5% to 6% range associated with a healthy economy. Twelve million people are unemployed. Yet that figure doesn't include 2.6 million people without jobs who have stopped looking for one. An additional 8 million work part time but want full-time work. Combining all those groups, 22.6 million people are either unemployed or "underemployed." They represent an underemployment rate of 14.3%, down from a peak of 17.1% in April 2010. The private sector added 158,000 jobs in March, the smallest gain in five months and short of economists' expectations, a report by ADP payrolls processor showed on Wednesday. The biggest job gains were in finance and professional and business services, while construction and manufacturing hiring remained weak, according to the ADP National Employment Report. The government will report its latest monthly employment data on Friday. Economists are projecting that non-farm payrolls grew by about 200,000 in March and the unemployment rate held steady at 7.7%. For the past two years, the economy has been adding about 175,000 new jobs a month, barely enough to produce a gradual decline in the unemployment rate. Despite that sluggish hiring pace, some occupations like engineering and health care seem to have dodged the Great Recession's heavy layoffs. An indicator of the shortage of those highly-skilled workers is the surge in applications this year for so-called H-1B visas. Under current immigration law, some 65,000 such visas are issued to foreigners who want to work for companies who can demonstrate they're having a hard time filling those jobs. On the other hand, millions of workers in occupations like construction and manufacturing remain caught outside the workforce. As of last month, more than one in seven construction workers was looking for a job. The housing market rebound that is helping to sustain the recovery also varies widely from region to region. In North Dakota, an ongoing energy boom has cut the jobless rate for the state's tiny labor force to just 3.3%. In California, which has the largest pool of workers in the nation, nearly 1 in 10 is unemployed as a lingering housing collapse continues to cut into job requirements. (2). HOUSING. Previously occupied homes were sold in February at a seasonally adjusted annual rate of about 4.98 million. An annual rate of about 5.5 million would be healthy. In the recession, sales had bottomed at 3.8 million. And last month, builders began work at a seasonally adjusted annual rate of 917,000 homes. That's well up from a recession low of 478,000. But it's still far from a healthy annual rate of roughly 1.5 million. Prices have risen nearly 9% since bottoming in March 2012, according to the S&P/Case-Shiller index, but they remain 29% below their pre-recession peak. Still, housing differs from other sectors because its peaks occurred during a housing bubble that eventually burst. Few expect or even want prices to return to those levels soon. Most economists welcome the steady but modest growth housing has achieved in recent months. (3). AUTOMOBILE SALES. Car sales in recent months returned almost to where they were in 2007. Americans bought cars at an annual rate of nearly 16 million in December 2007. Sales plunged to 10.4 million in 2009. In March this year, the annual sales pace was 15.3 million. The rebound has stimulated hiring and restored the once-bankrupt General Motors and Chrysler to health. Production was about 5% lower in February than in December 2007, according to the Federal Reserve. The Fed also tracks industrial output, a broader measure that includes mining and utilities. That figure is just 1.8% below its pre-recession peak. ~~~~~ So, dear readers, America is improving. It is putting the Great Recession behind it. Europe would be thrilled to have these economic indicators. But, there are problems like budget deficits and the national debt, as well as the galloping costs of social programs, still to deal with. But there is no doubt that a growing American economy will make these problems easier to solve - if only Washington chooses to act. [Thanks to AP and CNBC for the statistics.]